Suzuki Motor Corp said quarterly profit plunged by almost a third on slumping car demand in India, its biggest market, and Japanese automaker slashed its full-year vehicle sales outlook. After decades of robust growth, India's auto sector has been in a tailspin, hit hard by a liquidity crunch at the country's shadow banks that have squeezed financing for car sales as well as by higher taxes and a weak rural economy. "We no longer think that growth in India will be an uninterrupted move upwards," President Toshihiro Suzuki told an earnings briefing.
"We anticipate hills and valleys, so we need to focus on recovering from the current valley we're in to ensure sustainable growth." Operating profit for Japan's fourth-largest automaker tumbled 32% to 55.9 billion yen ($514 million) in the July-September quarter from the same period a year earlier. A drop in domestic output due to the need to improve its inspection processes after a mileage scandal also hurt.
That was its weakest level in nearly three years but it exceeded an average forecast for 44.9 billion yen from nine analysts according to Refinitiv data. Suzuki, which accounts for roughly half of India's passenger vehicles through its majority stake in Maruti Suzuki India Ltd, sold just 305,000 vehicles in India in the quarter, down 32% and its lowest quarterly sales since the December 2014 quarter. It now expects its India vehicles sales to slide by a fifth this business year. That compares with its previous forecast of a 4% rise.
Suzuki last month cut its estimate for full-year operating profit by 40% to 200 billion yen, a four-year low and a long way off its record high of 374.2 billion yen hit in the business year ended in March 2018. Globally, Suzuki posted quarterly sales of 670,000 vehicles, down around 20% from a year ago. It currently expects annual global sales of 2.85 million units, down 15% from an earlier forecast.
Suzuki and Toyota Motor Corp announced in August they would take small equity stakes in each other as they try to leverage their combined scale to manage costs and boost the development of new vehicle technologies.